The Government of Liberia through the Ministry of Finance and Development Planning (MFDP) has signed a US$4.8 million Participating Agreement (PA) and Approval of Withdrawal Request for the Micro, Small and Medium Enterprises (MSMEs) through the World Bank Rural Finance Post Ebola Reconstruction Project with GN Liberia Limited Bank and BRAC Liberia, among others. The signing will enable access to US$ 4.8 million grant from the World Bank intended to make funding available to MSMEs on sustainable terms, strengthen the capacity of Liberia’s private sector financial institutions and banks to lend profitably to Small Medium Enterprises (MSMEs).

Speaking at the signing ceremony on Friday August 25, 2017, the Country’s Finance Minister Hon. Boima S. Kamara, assured that through the provision of Partial Credit Guarantees and lines of credit, the agreement will provide 500 new loans to MSMEs which will create or sustain at least 2,000 jobs, limit non-performing loans to below 10 percent, and lead innovations in the use of mobile money.“ Today’s signing is the culmination of months of efforts by MFDP, the Central Bank of Liberia, and the World Bank to conduct due diligence and lay the foundations for strong grant management’’ the Finance Minister emphasized.

According to Min. Kamara, the Ministry of Finance and Development Planning (MFDP), Central Bank of Liberia (CBL), and World Bank have assessed the capacity of each participating institution to ensure they are ready to administer the MSME Rural Finance project.

He noted that all participating financial institutions have been found to meet stringent eligibility criteria and will be held to these standards throughout the program’s lifetime. Minister Kamara further indicated that we even expect the various participating financial institutions to strengthen their controls and performance through this program and that it is expected that the business operations of every Recipient shall be conducted with due diligence and must meet sound administrative, financial, and agricultural and rural development practices.

‘’ This agreement today will also ensure the highest standard of controls. Funds under the project will be ring-fenced; sub-credits will be separate and distinct from the rest of their credit portfolios, while others participating institutions will be responsible for conducting due diligence on sub-credit recipients and monitoring the portfolio’s health’’ he added.

He reiterated that this initiative is truly important because, particularly in a market like Liberia, inclusive economic development is about more than simply access to credit. To spur growth and real job creation, lending must also be about targeting financing solutions to the needs of MSME businesses – for example, loan terms and duration, particularly in agriculture – and helping them grow.

The MSMEs are drivers of economic activities and innovation in Liberia’s economy. They are collectively the largest employers we have, outside of government. Access to financial service can boost job creation, raise income, reduce vulnerabilities and increase human capital investments. Despite their undeniable importance, World Bank data suggests that MSMEs are less likely to have access to capital – instead, MSMEs often rely on informal capital sources. 41% of MSMEs report access to finance as a major constraint to their growth and development in LDCs according to the World Bank.

“The needs for targeted, affordable financing for MSMEs, particularly in agriculture, is vividly evident in Liberia’’, the Finance Minister stressed.

The Liberian economy has long been driven by major concessions, in rubber and iron ore which have become vulnerable to external shocks. Today, the Government of Liberia is so committed by shifting its focus to economic diversification, particularly through agriculture, agro-processing and manufacturing. But this transformative shift can only happen if trade financing is unlocked. MSMEs represents the bulk of employment opportunities in Liberia, responsible for about 80% of income generations, and will lead domestic and regional transformation.

GN Bank Deputy Managing Director for Operation, Mr. Kweku Bio, expressed joy over his bank joining this network, and vowed to use it in every part of Liberia so that those that are in need of the facility can access it, but stresses “these loans are supposed to be paid back so when they are disbursed customers are supposed to pay back to allow others to benefit”.